NANA prices, Aurora, Ceridian up next; big Heinz deal slates; Chesapeake still gyrates

By Paul Deckelman and Paul A. Harris

New York, March 13 - The high-yield primary sphere saw just one dollar-denominated, junk-rated pricing on Wednesday - engineering, construction and logistics company NANA Development Corp.'s $275 million of six-year secured paper, which moved up modestly when the new bonds were freed to trade.

But while actual pricing activity was sparse, there was no shortage of things going on behind the scenes.

High-yield syndicate sources said that price talk surfaced on pending deals from business services provider Ceridian Corp., which is shopping $400 million of eight-year notes, and from electrical cable manufacturer Belden Inc., which is bringing a 10-year euro-denominated offering. Both are expected to price during Thursday's session.

Thursday could also see a quick-to-market seven-year pricing from the U.S. arm of Australian energy operator Aurora Oil & Gas Ltd., which announced its deal on Wednesday.

Another company unveiling an upcoming deal was H.J. Heinz Co., whose Hawk Acquisition Sub Inc. will sell $2.1 billion of secured notes later this month as part of the funding for the acquisition of the venerable pickle and ketchup giant by Warren Buffet's Berkshire Hathaway Inc. and 3G Capital.

Traders said that recently priced junk deals mostly remained well bid-for, including Tuesday's transactions from Western Refining, Inc., Steel Dynamics Inc. and GEO Group, Inc.

Away from the new deals, Chesapeake Energy Corp.'s 6.775% 2019 notes were busier than ever, as players sought to position themselves ahead of an expected Thursday afternoon court ruling on whether the natural gas company can - or cannot - call those bonds at par.

There was also considerable activity in Travelport LLC's paper, which rose for a second consecutive session after the travel services company announced an exchange offer for much of its outstanding bond debt as part of an overall refinancing program.

Statistical measures of junk market performance were mixed for a third consecutive session.

NANA brings secured deal

Alaska-based NANA Development priced Wednesday's sole deal, a $275 million issue of six-year secured notes (B3/B+) which came at par to yield 9½%.

The yield printed on top of yield talk.

Goldman Sachs ran the debt refinancing and general corporate purposes deal.

Heinz plans $2.1 billion

Wednesday's big news in the primary market was the announcement of a $2.1 billion bond deal backing the leveraged buyout of Heinz.

Dealers are shopping a single tranche of 7.5-year second lien senior secured notes (B1/BB-/BB) on a full roadshow.

The bonds are expected to come yielding around 5%, according to a buyside source who played the bridge loan backing the bond deal.

The bonds are expected to price late in the March 18 week or early in the March 25 week via left bookrunner Wells Fargo.

J.P. Morgan, Barclays and Citigroup are the joint bookrunners.

Talk and whisper

Heinz, the pricing of which appears to be at least a week off, fattened up an already substantial calendar of deals, many of which are expected to price by the end of the present week.

However at Wednesday's close official timing and price talk were scarce, sources said.

One exception is Ceridian, which talked its $400 million offering of eight-year senior notes (Caa3/CCC) to yield 11% to 11¼% on Wednesday.

Books close at 3 p.m. ET on Thursday and the deal is set to price after that.

Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC and BofA Merrill Lynch are the joint bookrunners.

Meanwhile Aurora USA Oil & Gas Inc. announced late Wednesday that it plans to price a $250 million offering of seven-year senior notes on Thursday.

Credit Suisse Securities (USA) LLC and UBS Investment Bank are the joint bookrunners.

The energy company plans to use the proceeds to fund the acquisition of additional acreage, as well as to fund capital expenditures and for general corporate purposes.

Apart from those two, which appear headed for the block on Thursday, Seitel, Inc.'s $250 million offering of six-year senior notes (B1/B) is heard to be playing to a book that is 1.5-times the size of the deal, an investor said late Wednesday afternoon.

Dealers aim to bring home a yield in the low 9% context, the source added.

Deutsche Bank and J.P. Morgan are the joint bookrunners.

The order book for Toronto-based MDC Partners Inc.'s $500 million offering of seven-year senior notes (B3/B-) is done, according to the buy-sider who added that yield discussions are taking place in the 7% area.

J.P. Morgan and Goldman Sachs are the joint bookrunners.

And the whisper on a $400 million offering of 10-year senior notes from Kansas railroader Watco Cos., LLC and Watco Finance Corp. has the yield coming in the mid-to-high 6% range, the source added.

Wells Fargo is the left bookrunner. J.P. Morgan, Barclays, BMO and U.S. Bancorp are the joint bookrunners.

Belden talks euro deal

Turning to the European primary market, St. Louis-based Belden Inc. talked its €200 million offering of 10-year senior subordinated notes (Ba2/B+) to yield 5½% to 5¾%.

The deal is expected to price on Thursday.

Joint bookrunner Deutsche Bank will bill and deliver. Goldman Sachs, JPMorgan and Wells Fargo are also joint bookrunners.

Elsewhere in Europe, market watchers are following the fortunes of the €500 million equivalent offering of six-year senior PIK toggle notes (/B-/B-) from Mobile Challenger Intermediate Group SA, the parent of Switzerland's Sunrise Communications Holdings SA, sources say.

The transaction was announced as a three-part deal featuring tranches of dollar-, euro- and Swiss franc-denominated notes.

It was shopped to European accounts earlier in the week, and a roadshow was expected to take place on Wednesday and Thursday in the United States.

However a United States-based investor, relating information heard from a person on the sales staff of one of the dealers, said that the dollar-denominated notes have been withdrawn, and professed the expectation that Sunrise Communications' bonds would end up being an all-euro transaction.

Global coordinator Deutsche Bank will bill and deliver. Goldman Sachs is also a global coordinator. UBS, BNP Paribas, Credit Suisse and Morgan Stanley are the joint bookrunners.

Although PIK toggle deals are among the more aggressive structures seen in the Rule 144A and Regulation S markets, Sunrise Communications is not perceived to be all that aggressive, according to a London-based debt capital markets banker who noted that the issuer will be required to make interest payments in cash if its restricted payments capacity and minimum cash requirements are met.

Nice move for NANA

When the new NANA Development 9½% senior secured notes due 2019 were freed for secondary dealings, a trader quoted the new bonds at 100¾ bid, 101½ offered.

That was up from the par level at which the Anchorage, Alaska-based engineering, construction, resource development, facilities management and logistics company had earlier priced its offering.

Tuesday deals do well

A trader opined that "all of the [recent] new issues went pretty well."

He said that "the two that really stood out" were the new deals from Steel Dynamics and Western Refining.

He saw Steel Dynamics' 5¼% notes due 2023 in a bid range of 101 1/8 to 101¼ - slightly above the levels around 100¾ to 101 where the Fort Wayne, Ind.-based steel producer and recycler's quick-to-market $400 million offering had traded late Tuesday after pricing at par.

He meantime said that Western Refining's quickly-shopped $350 million issue of 6 1/8% notes due 2021 had done even better, calling it "the one that I loved the most." He pegged those bonds in a 102 to 102¼ bid range.

The El Paso, Texas-based petroleum processing company's new deal had priced at par on Tuesday but appeared too late for any aftermarket trading at that time.

At another shop, a trader located the Steel Dynamics bonds at 101 bid, 101½ offered, while seeing Western Refining at 101 7/8 bid, 102 3/8 offered.

He also saw GEO Group's 5 1/8% notes due 2023 at 100¾ bid, 101¼ offered. That $300 million same-session offering from GEO, a Boca Raton, Fla.-based outsource provider of detention, correction rehabilitation and other services to government agencies, had priced Tuesday at par.

Yet another trader saw the bonds unchanged from Tuesday's late levels at 101 1/8 bid, 101 5/8 offered.

Monday deals hold gains

A market source said that CBRE Services, Inc.'s new 5% notes due 2023 were trading on Wednesday around the 101¼ bid level, on busy volume of over $10 million by mid-afternoon.

That was around the 101 1/8 bid, 101¼ offered area where those bonds had traded on Tuesday, when they were freed for aftermarket dealings.

CBRE, a Los Angeles-based real estate company, had priced an upsized $800 million of those notes at par off the forward calendar late in the session on Monday, after enlarging the deal from an originally announced $500 million.

However, a second trader said on Wednesday that from where he sat the bonds were "unseen."

He said that Monday's other deal - Levi Strauss & Co.'s 6 7/8% notes due 2022 - were at 109¼ bid, 110¼ offered.

That was about unchanged from where they had been trading at on Tuesday.

The iconic San Francisco-based blue jeans manufacturer had done a quickly-shopped $140 million add-on to the existing $385 million of those notes which it had sold in April 2012, pricing the new notes at 108 to yield 5.438%.

The 2022 notes - which had been trading around 109¼ bid last week, before the add-on was announced - were seen late Monday having moved back up to around a 109 to 109¼ bid context.

MetroPCS moves up

A trader said that both tranches of MetroPCS Wireless Inc.'s big two-part offering firmed about ½ point on Wednesday, after having eased a little during Tuesday's session.

He saw its 6¼% notes due 2021 at 101 5/8 bid, 101 7/8 offered, up from 101 1/8 bid, 102 offered on Tuesday.

That $1.75 billion issue had priced at par on Friday, too late in the session for any aftermarket dealings, and then had moved up to around 101½ bid when it was freed to trade on Monday, before giving up some of that advance on Tuesday.

The Dallas-based pre-paid wireless operator's $1.75 billion of 6 5/8% notes due 2023meanwhile ended Wednesday at 101½ bid, 101¾ offered, which the trader called up from 101 bid, 101 5/8 offered on Tuesday.

That tranche also had come to market at par on Friday, too late to trade around at that time. The bonds had gotten up to 101¼ bid when they started trading on Monday, only to ease a little in Tuesday's trading.

ILFC heads skyward

A trader saw International Lease Finance Corp.'s 3 7/8% notes due 2018 having moved up to about the 101¾ bid level on Wednesday - better by 1 3/8 points on the day.

The Los Angeles-based commercial aircraft leasing company had priced $750 million of those notes last Wednesday at 99.996, and they had spent the next several sessions trading around, or even below that issue price. There was no immediate explanation for Wednesday's rise.

The trader meantime had not seen any activity Wednesday in the other half of that $1.25 billion split-rated (Ba3/BBB-/BB) offering - the company's $500 million of 4 5/8% notes due 2021, which had priced at 99.994 last Wednesday, and then also pretty much stayed around their issue price in subsequent dealings.

Traders noted that the deal's split rating generated interest among both high-yield and high-grade accounts, with one suggesting that the high-yield players were flipping out of the issue, while the high-grade investors were buying it.

Chesapeake awaits decision

Away from the new deals, the standout name in the secondary market on Wednesday was Chesapeake Energy, specifically its 6.775% notes due 2019. For a third straight session, they were easily the most active issue in Junkbondland, with a market source estimating that at least $95 million of those bonds had changed hands on a round-lot basis alone - around double the volume seen on Tuesday. He said the overall total was probably considerably more than that, if smaller odd-lot transactions were thrown into the mix.

He saw the bonds lose about ½ point on the day to end at 105½ bid, after they had traded above 106 on Tuesday before ending at that latter mark.

A second trader agreed that "they were trading all day" in a 105¼ to 105½ range. "Now it's become one of the darlings."

Traders have noted that the big gains in those bonds in recent days, to levels multiple points above par, were an indication that many people in the market expect Chesapeake's effort to call those bonds for redemption just at par plus accrued interest, as the Oklahoma City-based natural gas and oil operator would like to do, is doomed to failure; the reasoning is that if Chesapeake can't redeem the bonds at par, it would have to pay a much higher make-whole call price if it wishes to take them out.

Chesapeake and its bondholders and the notes' trustee Bank of New York Mellon Trust Corp., have been battling in the federal court in Manhattan over the past several days over whether the company can do a call at par - Chesapeake says the language in the bonds' indenture gives it the right to call the notes at par provided such a notice is given to holders before the end of a special early call period on Friday, while the trustee and the bondholders contend that the indenture only lets the redemption happen during that period, not afterward, and obligates Chesapeake to give the holders at least 30-days notice on such a move - meaning the company should have issued its redemption notice a month ago in order for it to be legally valid.

The jurist who has been hearing the case, U.S. District judge Paul Engelmayer, told the lawyers for both sides that he would release his decision on Thursday afternoon. Chesapeake has indicated that if it gets a favorable ruling, it would indeed proceed with a call on the $1.3 billion issue, but if the ruling goes the other way, it would not call them at the more expensive make-whole price - the preferred outcome of the bondholders - but would merely leave them in place.

In a research note, senior analyst Philip C. Adams of the Gimme Credit independent investment advisory service opined that the court would most likely rule in Chesapeake's favor - but he also suggested that calling the bonds now, six years ahead of schedule, probably would not be the wisest use of scarce cash for Chesapeake, which is frantically trying to sell non-core assets in order to raise the $4 billion to $7 billion it needs to bridge the gap between its development and debt-reduction needs and its actual revenues.

Adams warned that "the fact that they've gone to court says that they're at least thinking about the call, at par. And that means the 2019 issue, trading at about 106, is a pretty risky bet" - so investors should steer clear.

Travelport gains again

Elsewhere, a trader said Travelport LLC's bonds "continue to be active," seeing the 9 7/8% notes due 2014 firm up to levels around 101.

The trader also saw the 11 7/8% notes due 2016 rising to around 80.

Another trader pegged the 9 7/8% notes at 1011/2, up over a point on the day, while the 11 7/8% notes hit 791/4.

He placed the floating-rate notes due 2014 at 951/2, though he was not sure what sort of movement that was.

"They don't trade much," he said of the latter issue.

A market source called the 9 7/8s up 7/8 point on the session with over $43 million having traded - second only to the Chesapeake 2019 bonds.

He saw the 11 7/8s up by 5/16 point, on volume of over $14 million.

The company's floaters were meantime up more than 5 points to hit the 95 level, on about $10 million of activity.

On Tuesday, the Atlanta-based travel services provider said that bondholders had agreed to a plan under which they would swap their debt for new 13 7/8% notes due 2016 or floating-rate notes due 2016, plus cash.

The company also reached an agreement with its PIK-loan lenders to swap the debt for equity.

Travelport also reported quarterly results on Tuesday. Though the company more than doubled its loss to $171 million - compared to $84 million the previous year - the results were in line with expectations.

Market indicators stay mixed

Overall, statistical junk performance indicators were mixed for a third consecutive session on Wednesday, after having been higher across the board for most of last week.

The Markit Series 19 CDX North American High Yield Index gained 7/32 point to close at 104 11/32 bid, 104 15/32 offered, after having eased by 1/32 point on Tuesday, its first retreat after three straight advances.

But the KDP High Yield Daily Index backtracked by 2 basis points Wednesday to close at 75.54, after having been unchanged on Tuesday.

Its yield was steady at 5.54%, after having risen by 1 bp on Tuesday.'

However, the widely followed Merrill Lynch High Yield Master II index continued to roll robustly on, notching its 11th consecutive daily advance Wednesday with a 0.038% gain, on top of Tuesday's 0.076% rise.

That latest improvement lifted its year-to-date return to 2.485% - a new peak level for 2013 so far, and the seventh straight session in which it has reached a new high point for the year. The previous zenith was Tuesday's 2.446% reading.

Stephanie N. Rotondo contributed to this review

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